FTSE 100	5666.10, +31.4	Dow	11811.83, +4.4
FTSE 250	9321.2, +128.9	Nasdaq	2401.26, +32.98
FTSE All Share	2881.15, +19.31	S&P 500	1321.97, +7.68
Nikkei	13822.32, -7.6	Hang Seng	22455.67, -179.49
Oil (Brent)	$134.6	Gold	$891.10
Base Rate	5%	10 Yr Gilt	5.10%
£/$	1.9795	£/€	1.262

Markets

London - UK stocks ended 0.6 percent lower on Wednesday as losses at food and drug retailers and energy groups outweighed gains in banks ahead of a rate decision by the US Federal Reserve. The FTSE100 closed 32.5 points lower at 5634.7.

With oil trading close to $137 a barrel both utilities and energy stocks were mixed. Centrica, Scottish and Southern Energy and National Grid lost 2.2-3 percent, while BP lost 0.6 percent, BG Group fell 1.9 percent. Royal Dutch however gained 0.8 percent. BG was also hurt by its hostile $13.1bn bid for Australia’s Origin Energy, as it sought to boost its position in Asia-Pacific’s fast growing gas market.

Banks notched up late gains, tracking US financial stocks higher. Barclays jumped 4 percent and RBS rose 2.1 percent. HSBC fell 0.2 percent on market talk that the British bank could make a bid for the world’s largest wealth manager, UBS. Both declined to comment. But investors remained cautious ahead of a US Federal Reserve statement on Wednesday that could shed light on the timing on possible interest rate increases. Sentiment was also down because of US data showing consumer confidence fell in June to its lowest in 16 years, fuelling worries over consumer spending. Bradford and Bingley soared 17 percent after restructuring specialist Resolution said it planned to consolidate some of Britain’s smaller banks and had been invited by investors in B&B to consider using it to spearhead the plan. B&B rejected the investment approach, saying it would have meant Resolution taking effective control of the lender.

Miners slipped, tracking weaker metal prices. Xstrata, Anglo American and Vedanta Resources fell between 0.7 and 3 percent. But Antofagasta gained 1.7 percent after Credit Suisse upgraded the stock to outperform from neutral and raised its price target to 760 pence from 600 pence.

New York - US stocks gave up bigger gains by the close on Wednesday, as investors welcomed the Fed’s decision to hold rates steady, as expected, but remained wary about the economy. The Dow Jones ended 4.4 points higher at 11811.83, the Nasdaq added 32.98 points to close at 2401.26 and the S&P500 added 7.68 points to close at 1321.97.

Stocks rallied in the morning on falling oil prices and were extended further in the afternoon after the central bank decision. But weakness in select sectors caused the Dow to give up most of its gains and the other major gauges to cut gains.

The Fed held a key short term interest rate steady, as expected, and indicated that the economy was starting to recover. At the same time, the bankers also took a slightly more hawkish stance on inflation and this may have given investors a reason to shed bigger gains. The central bank pumped billions into the banking system as a means of loosening up the stalled credit markets. In its statement, the bankers implied that some of this stimulus has helped and will continue to help. The statement said "although downside risks to growth remain they appear to have diminished somewhat and the upside risk to inflation and inflation expectations have increased". This part of the statement shows that although the bankers did upgrade the assessment of the economy, they also shifted the risks more toward inflation versus growth, said one senior economist at Wells Fargo.

Boeing slid almost 7 percent after the company was downgraded to sell from neutral by Goldman Sachs. United Technologies also declined.

American Express said MasterCard will pay it as much as $1.8bn to settle an antitrust suit. The financial services company also cautioned that consumer credit is deteriorating faster than it expected this month, which would result in bigger credit losses. AmEx shares initially struggled for direction, but ended up sliding into the close along with the rest of the financial sector. Bank stocks such as Citigroup had been up more than 4 percent earlier in the session, but ended up closing flat or lower.

In economic news, the government reported Wednesday that May durable goods were basically flat, after falling 1 percent in April. The reading on big ticket items, the type meant to last three years or more, was in line with analyst’s expectations.

Another report showed that new home sales declined 2.5 percent in May, to a seasonally adjusted annual rate of 512,000 units versus 525,000 in April. That was just above the expectations of economists, who were forecasting a rate of 510,000 units. However, year over year sales dropped 40 percent, reflecting the ongoing fallout in the housing market.

US light crude for August delivery fell $2.45 to settle at $134.55 a barrel on NYMEX after a government report showed a surprise jump in crude inventories last week.

Gas prices fell for a third time in a row this week. The national average price for a gallon of regular unleaded gas fell to $4.067 from $4.069 the previous day.
In currency trading, the dollar declined versus the euro and rose against the yen.

In the bond market, Treasury prices slumped, raising the yield on the 10 year note to 4.16 percent to 4.1 percent.

COMEX gold for August delivery fell $9.30 to $882.30 an ounce.

Tokyo - The Nikkei average closed lower on Thursday, extending its longest losing streak this year to a sixth session as lower oil prices dented trading hoses such as Mitsubishi Corp. Trade was lacklustre ahead of a flood of economic data as growing uncertainty about the global economy thinned the market, although defensive shares such as Pharmaceuticals stood firm as investors sought safety.

Among other gainers was Sony Corp, which said after the close that it would double sales in BRIC countries to 2 trillion yen by the year ending in March 2011. The Nikkei closed 7.6 points lower, in a day of volatile trading that saw it move in and out of positive territory before closing at 1344.79.

Economics

US GDP (Q1, final) 13.30 bst

The final reading of Q1 GDP should remain at 0.9 percent, with the GDP deflator unrevised at 2.6 percent.

US Initial jobless claims (week 21 June)

Initial jobless claims are expected to be at 375,000

US Existing home sales (May) 15.00 bst

The 6.3 percent rise in April pending home sales suggests a likely increase in existing home sales. May existing sales are expected to rise to 5.05m, up from 4.89m in April. This would leave the year on year change in existing home sales at 15 percent and the cumulative decline since the September 2005 peak at 30 percent, comparable to the latest results for pending sales. Existing sales in the West should rise further (after increases in March and April), while existing sales in the Midwest should bounce off their lows, given the 13 percent jump in pending sales in that region during April.

Corporate

DSG International said today that investors had been "very supportive" of its turnaround plan, which was announced in May, despite a continued fall in its shares since that data. CE John Browett said "They recognise that this plan will add significant value to shareholders. They have been applauding what we’re actually doing". FD Kevin O’Byrne also told a conference call that he did not expect analysts to change their profit forecasts for the current financial year, after the group met expectations by reporting a 30 percent drop in underlying annual profit to £205.3m. He noted that several forecasts for the current year were pitched around £130m-£135m.

United Business Media said today its first half results would be modestly ahead of expectations, after a good performance by technology businesses. The company said "Despite the volatility of markets worldwide, UBM’s products and services in the business to business markets we have chosen to operate in have, to date, generally proven resilient". UBM said "This strategy shows early signs of success", and first half revenues will be higher year on year. The company also said changes at its CMPMedica healthcare business were having their planned impact. UBM said the performance of events it runs "has been in line with, or ahead of, our expectations". Turning to publishing, UBM said while it expected "cutbacks in certain areas of advertising during 2008 and, most likely, into 2009 our advertising related products are increasing market share".

The LSE plans to set up a pan European trading platform with Lehman Brothers to stave off start up rivals eroding its market shares, the group said. The stand alone joint venture called Baikal, would offer access to securities across 14 European countries in a so called dark liquidity pool for off bourse trading, combined with algorithmic trading functions. The group said "Baikal aims to address the growing complexity of order execution by allowing participants to trade large orders in a trusted environment, thereby minimising market impact". Shares in the LSE have now fallen over 50 percent this year amid fears it is losing market share to new trading platforms such as Chi-X , which offer faster trading execution times.

DS Smith posted a 39 percent rise in annual pre-tax profit today and warned current financial year performance will be affected by slowing demand and higher input costs. The company reported £109.1m in profit before tax for the year to end April, above analyst’s average forecasts of £98.1m.

The above details are provided for information only and are not intended to be construed a solicitation for the sale or purchase of any particular investment nor as specific investment advice.

Posted: June 26th, 2008 under Asset Management.
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